In a Malaysian Pop-Up City, Echoes of China’s Housing Crash

It was an audacious real estate project undertaken a decade ago by a Chinese developer: a $100 billion city in Malaysia built on sand and shrubby mangroves and sold as a luxury “dream paradise” for China’s middle class.

Many of Forest City’s residents today are transient — the caretakers of the grounds who sweep the empty roads and pick up the garbage, trim the hedges and water the plants.

“I see so many new faces,” said Thana Selvi, who works at KK Supermart, a brightly lit convenience store that stands out among the mostly boarded-up, empty spaces on the street level. She rents a room in an apartment above the shop, month to month, for $118.

At a distance, Forest City’s rows of high-rises tower over the Johor Strait between Singapore and Malaysia like a monument to China’s economic triumphs. Up close, the streets are quiet, most apartments are dark and large stone slabs demarcate the lush forest from the “land to be developed.”

The giant Chinese property developer Country Garden dreamed up Forest City as a “green futuristic city” spanning 12 square miles and four man-made islands. There were supposed to be 700,000 apartments. Only one island, with 26,000 apartments in several dozen towers, was built.

Since Country Garden defaulted on its debt last year, it has become an emblem of the excesses of China’s housing boom, a corporate deadbeat unable to pay its bills or build the apartments it promised. Hundreds of thousands of home buyers and projects like Forest City are in limbo. Creditors that are suing Country Garden in Hong Kong could eventually seize Forest City.

With few residents and an uncertain future, Forest City now serves as a blank canvas. It has been used as a setting for the reality shows “The Mole” on Netflix and “Battle Trip” on South Korean television. A cryptocurrency investor, Balaji Srinivasan, recently started using a space in Forest City for a temporary tech school.

But Country Garden is holding on to its ambitions. “The blueprint for Forest City will not change,” Country Garden said in a statement to The New York Times. “Reasonable development and construction will be carried out according to demand.”

For years, Country Garden gorged on cheap money to sustain a build-and-they-will-come strategy that characterized China’s housing frenzy. When it tried to take that model overseas, chasing money that was leaving China, it ran into trouble.

In 2014, almost as soon as trucks began to dump sand on sea grass to build land, the project was thrown off track. Construction was halted for months to assess Forest City’s environmental impact after officials in Singapore — a few miles away across the strait — raised concerns to Malaysia. Two years later, China, fearing the collapse of its currency because money was streaming out of the country, stopped citizens from buying property in Malaysia and other nations.

Local Malaysian authorities, who have a 40 percent financial stake in Forest City, have tried to revive interest in the project. They promised to turn it into a special financial zone and last month dropped all taxes on the so-called family offices of ultrawealthy investors.

Yet all around there were signs that Country Garden had miscalculated demand.

On a trip to Forest City in early September, the office tower at the heart of the complex, where local officials now hope money managers will open offices, was locked with chains and watched over by guards. At night, the building was barely visible except for a broken green LED sign, blinking on occasion, perched on top. In the blocks of apartments nearby, entire floors were dark.

Stores in the mall, once earmarked for luxury retail and duty-free shopping, were chained up — some were filled with rotting wood and construction materials. The only patrons one evening were three women riding around on plastic motorized dinosaurs that lit up to “Last Friday Night” by Katy Perry.

“Country Garden was riding the wave rather than thinking about the opportunity to create a city,” said Michael Grove, a landscape architect at the design firm Sasaki who was brought in, together with consultants from McKinsey, to help make the developer’s plans more economically and environmentally viable in late 2014.

“They were doing construction on the fly,” said Mr. Grove.

If any company could have pulled off Forest City, it would have been Country Garden. Once one of China’s most prolific developers, it boasted of its “fast development and sales.” For Forest City, it plastered advertisements in Beijing, Shanghai, Guangzhou and other cities. It flew in interested Chinese buyers to see model apartments. Real estate agents played up the possibility of getting special visas and a pathway to Malaysian citizenship.

In China, where there are few places to invest savings other than real estate, Forest City was cast as a hard-to-miss opportunity.

Su Mu was living in Shanghai in 2016 when Country Garden offered him a free trip to Forest City. He found the air clean and the scenery pleasant. He had invested in properties in China, so he bought a place in Forest City for around $151,000.

“The prices here were not expensive compared to those in China,” said Mr. Mu, who recently decided to move to Forest City full time. “I am now 40 and want to change to a new environment and have a new start.” There aren’t a lot of people in his building, he acknowledged. “It was not very good at first, it felt far away and remote.”

As the sun set along Forest City’s white sand beach, several families from nearby communities brought their children to play in the modest Forest City water park.

One Chinese couple took photographs on a long sculpture called “Stairway to Heaven” that stretched into the sky. They said they bought an apartment in 2016 and traveled from a coastal city in Zhejiang to Forest City once a year for vacation.

Most of the owners in Forest City seem to rent their apartments out and live in China. Across China, so many developers went bust that vast numbers of home buyers were left stranded without the apartments they had paid for. Some people who own units in Forest City, speaking in a private group on Chinese social media, recently expressed relief that their apartments had been built.

Country Garden said 80 percent of its apartments were sold to buyers from more than 20 countries. The developer declined to say how many people were living at Forest City today.

But on a trip last month, Forest City looked abandoned. Most of the people there were Chinese tourists, restaurant and store owners and a team of landscapers, cleaners and security guards from Indonesia, Nepal, Pakistan and Bangladesh who worked tirelessly to keep things running. Early in the morning, before the hot sun, some of the workers rested on the balconies of Forest City apartments, their cleaning rags and sarongs hanging to dry.

On the street level, two Chinese businessmen, using a translation app on their phones, tried to enlist laborers from Bangladesh to do some work.

Nearby, a group of Nepalese security guards stood in a perfect line to greet their Forest City manager.

Outside the city, along a highway built by Country Garden leading to the causeway connecting it to Singapore, landscapers in green shirts and the occasional sun hat hunched over hedges or blew leaves off the street.

Zixu Wang contributed reporting.

Around the World With The Times

Our reporters across the globe take you into the field.

• Alone in the Dark: In Bangladesh’s secret underground prison, political captives were pushed to the brink of insanity and death. Some are telling their stories now that the woman who put them there, Sheikh Hasina, is gone.
• The Panda Factories: In the 1990s, China began sending pandas to foreign zoos to be bred, in the hope that future generations could be released into nature. It hasn’t gone as planned.
• Saving Democracy or Hurting It?: Brazil’s Supreme Court expanded its power to protect democracy in the country. But some are wondering whether the court now represents the threat.
• A Future of Historic Droughts: A record-breaking drought is punishing much of South America, providing an alarming glimpse into the future as the effects of climate change become more apparent.
• A Startling Life Choice: The popular television host Natalia Morari was a scourge of oligarchs in Moldova. Now she has upset many by having a son with a tycoon accused of corruption.